Question

Wildhorse Co.’s income statement contained the condensed information below. Wildhorse Co. Income Statement For the Year Ended December 31, 2017 Service revenue $2,463,800 Operating expenses, excluding depreciation $1,559,560 Depreciation expense 139,700 Loss on disposal of plant assets 40,640 1,739,900 Income before income taxes 723,900 Income tax expense 142,240 Net income $581,660 Wildhorse Co.’s balance sheet contained the comparative data at December 31. 2017 2016 Accounts receivable $177,800 $152,400 Accounts payable 104,140 81,280 Income taxes payable 33,020 17,780 Accounts payable pertain to operating expenses. Prepare the operating activities section of the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Wildhorse Co. Partial Statement of Cash Flows $ Adjustments to reconcile net income to $ $

Answer 1

Cash Flow Statement
	Detail	Net
Cash flow from Operating Activities
Net Income Before Taxes	723,900
Add: Non Cash and Non Operating Expenses
Depreciation	139,700
Loss on sale of plant	40,640
Profit before Working Capital Changes	904,240
ADD: Decrease in current assets and Increase in Current Liability
Accounts payable	22,860
Less: Increase in current assets and Decrease in Current Liability
Accounts receiveble	(25,400)
Operating Profit before tax	901,700
Less: Taxes	(127,000)
Cash flow from Operating Activities		774,700

Income Tax A/c
	$		$
To Bank	127,000	By Bal. b/d	17,780
		By P&L	142,240
	33,020
Total	160,020	Total	160,020